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REP 498 Life insurance claims: An industry review

Released 12 October 2016

This report contains the findings of an industry-wide review of claims handling in the life insurance industry.

The purpose of our review was to determine if there were any systemic concerns that apply either to the industry as a whole or to particular insurers.

We focused on life insurance claims by policyholders, assessing the outcome of claims and details of disputes about claims, as well as reviewing information about insurers’ policy documentation, information about claims staffing, systems and procedures, and sales practices.

Download the report (PDF 966KB) | Read the media release | Infographic - Life insurance claims - a snapshot | Infographic - ASIC's work so far

Infographic - Life insurance claims

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 Life insurance claims - A snapshot of ASIC's reviewLife insurance claims made between 2013-2015. 9 out of 10 claims have been paid.Based on ASIC data about decided claims.Percentage of claims declined, by cover type 2013-2015. Life 4%. Income Protection 7%. Trauma 14%. TPD 16%. On average more total and permanent disability and trauma claims are declined that life and protection claims.Main causes of disputes about claims. 25% evidence. 22% delay. 16% underpaid. 12% policy definition. 7% eligibility. 17% other.47% of all disputes about claims are related to evidence and delay. Based on ASIC third party data.Life Insurance Claims Infographic Footer 5

Infographic - ASIC's work so far

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 Life insurance claims - ASIC's work so far. ASIC has conducted the first stage of an industry-wide review of claims handling. It covers three distribution channels: group cover through superannuation, individual cover sold by advisors and individual cover sold directly to consumers without advice. The scope: Our review focused on 15 life insurers, representing over 90% of the market by premiums collected.Our review focused on a time period of 3 years, from 1 January 2013 to 31 December 2015. We reviewed four main types of life insurance products: Life, Trauma, Income Protection, Total and Permanent Disability. The detail: We completed our review in six months. We conducted detailed reviews of 5,438 life insurance disputes collected from six different sources, including ASIC. We collected and conducted a detailed review of approximately 17,000+ lines of data and 192,000+ data points.We conducted a targeted review of Product Disclosure Statements and policy documents, including policy definitions across all life insurers. We attended 50+ meetings with life insurers, industry experts, consumer advocates and other key stakeholders. Areas of further work: life insurers have initiated 15+ independent reviews of claims handling. The results from these reviews will help inform our further work. Actions to raise standards: 1. Public reporting of life insurance claims. 2. Strengthen the regulatory framework for claims handling. 3. Strengthen the dispute resolution framework for claims handling. 4. Follow up ASIC surveillances and reviews. 5. Strengthen industry standards and practices.

 

Last updated: 30/03/2021 09:31